Touchstone Exploration Inc.

Touchstone Exploration Inc.

January 24, 2012 08:30 ET

Touchstone Announces Over 300% Increase to Total Proved Reserves

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 24, 2012) -


Touchstone Exploration Inc. (TSX VENTURE:TAB) ("Touchstone" or the "Company") is pleased to announce the results of the independent evaluation of the Company's reserves for the year ended September 30, 2011.


  • Total proved reserves (net) increase of 319% to 4.03 million barrels (100% oil) from 2010 year-end levels;
  • Total proved plus probable reserves (net) increase of 292% to 7.57 million barrels (100% oil) from year-end levels;
  • Net present value of future net revenues before tax (10% discount) of Touchstone's total proved reserves was US$158.87 million as at September 30, 2011;
  • Net present value of future net revenues before tax (10% discount) of Touchstone's total proved plus probable reserves was US$299.89 million as at September 30, 2011;
  • On a per share basis, net present value of future net revenues before tax (10% discount) of Touchstone's total proved reserves was US$1.17 per share on a fully diluted basis (135,806,004 shares), an increase of 532% from 2010 year-end values; and
  • On a per share basis, net present value of future net revenues before tax (10% discount) of Touchstone's total proved plus probable reserves was US$2.21 per share on a fully diluted basis (135,806,004 shares), an increase of 474% from 2010 year-end values.

GLJ Report

In accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), GLJ Petroleum Consultants Ltd. ("GLJ") prepared an independent reserve evaluation (the "GLJ Report") with an effective date of September 30, 2011 and dated January 16, 2012 with respect to the Company's crude oil, natural gas liquids and natural gas reserves. The GLJ Report is Touchstone's first reserve evaluation following the Company's completion of the acquisition of all of the issued and outstanding shares of Primera Oil and Gas Limited, Primera Oilfield Management Services Limited and Primera East Brighton Ltd. from C L Financial Limited in August, 2011 and represents the consolidation of three independent reserves evaluations - the newly acquired assets of the Primera entities and Touchstone's WD-8 Block were formerly evaluated by AJM Petroleum Consultants, while the Coora Block, acquired earlier in 2011, had previously been evaluated by GLJ. The GLJ Report does not include any reserve assignments to the Company for the Cory Moruga assets (on shore Trinidad) or the East Brighton blocks (off shore Trinidad).

The GLJ Report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGEH") and NI 51-101. Touchstone's annual prescribed disclosure and reports relating to reserves data and other oil and gas information required pursuant to NI 51-101 for the year ended September 30, 2011, which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be filed on or before January 30, 2012 and copies of these documents may be obtained with other Touchstone disclosure documents through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at

Price Forecasts

The reserve evaluation was based on GLJ forecast pricing and foreign exchange rates at September 30, 2011 as outlined in the following table.

Bank of Canada Nymex WTI
Near Month
Futures Contract
ICE Brent Near Month Futures Contract
Average Crude Oil at Crude Oil
Noon Cushing Oklahoma FOB North Sea
Exchange Constant Then Then
Inflation Rate 2011 $ Current Current
Year % $US/$Cdn $US/bbl $US/bbl $US/bbl
2011 Q3 (e) 2.7 1.022 92.89 92.89 111.16
2011 Q4 2.0 0.980 85.00 85.00 105.00
2011 Full Year 2.7 1.012 93.64 93.64 109.64
2012 2.0 0.980 88.24 90.00 105.00
2013 2.0 0.980 91.31 95.00 105.00
2014 2.0 0.980 94.23 100.00 105.00
2015 2.0 0.980 92.38 100.00 100.00
2016 2.0 0.980 90.57 100.00 100.00
2017 2.0 0.980 90.00 101.36 101.36
2018 2.0 0.980 90.00 103.38 103.38
2019 2.0 0.980 90.00 105.45 105.45
2020 2.0 0.980 90.00 107.56 107.56
2021+ 2.0 0.980 90.00 +2.0%/yr +2.0%/yr

Reserves Summary

The following tables summarize certain information contained in the GLJ Report but represent only a portion of the disclosure required under NI 51-101, the full disclosure will be contained in the Company's annual NI 51-101 oil and gas disclosure which will be available on SEDAR. All reserves are located in Trinidad and Tobago. Numbers presented may not add due to rounding.

Light And Medium Oil Heavy Oil Natural Gas Natural Gas Liquids Total Oil Equivalent
Company Share Company Share Company Share Company Share Company Share
Reserves Category Gross
Producing 3,099.1 2,088.2 - - - - - - 3,099.1 2,088.2
Developed Nonproducing 906.2 552.9 - - - - - - 906.2 552.9
Undeveloped 1,844.8 1,386.5 - - - - - - 1,844.8 1,386.5
Total Proved 5,850.1 4,027.6 - - - - - - 5,850.1 4,027.6
Total Probable 5,028.7 3,537.5 - - - - - - 5,028.7 3,537.5
Total Proved Plus Probable 10,878.8 7,565.1 - - - - - - 10,878.8 7,565.1
(1) Mbbl = Thousand Barrels.
(2) Where applicable, natural gas has been converted to barrels of oil equivalent ("BOE") based on 6 Mcf:1 BOE. The BOE rate is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead. Use of BOE in isolation may be misleading.
(3) Mboe = One Thousand Barrels of Oil Equivalents (ie. one thousand BOE).

Reserves Values

Touchstone's crude oil reserves were evaluated using GLJ's product price forecasts effective September 30, 2011 prior to provision for interest, debt service charges and general and administrative expenses. It should not be assumed that the Net Present Value ("NPV") of future net revenues estimated by GLJ represents the fair market value of the reserves. NPVs on both a before and after tax basis are presented below.

Net Present Values of Future Net Revenue Unit Value Before Income Tax
Before Income Taxes Discounted At (%/year) Discounted at 10%/year
0% 5% 10% 15% 20%
Reserves Category M$ M$ M$ M$ M$ $/boe $/Mcfe
Producing 133,822 96,429 75,792 62,881 54,063 36.30 6.05
Developed Nonproducing 35,304 25,456 19,302 15,201 12,324 34.91 5.82
Undeveloped 93,981 76,329 63,775 54,403 47,160 46.00 7.67
Total Proved 263,107 198,214 158,869 132,485 113,547 39.45 6.57
Total Probable 275,256 186,882 141,030 113,047 94,175 39.87 6.64
Total Proved Plus Probable 538,363 385,096 299,899 245,532 207,722 39.64 6.61
(1) Based on NI-51-101 Net Interest reserves and GLJ September 30, 2011 Forecast Prices and Costs.

The following table provides an estimate of the NPV of future net revenues on an after tax basis incorporating the impact of taxes effective 2011.

Net Present Values of Future Net Revenue
After Income Taxes Discounted At (%/year)
0% 5% 10% 15% 20%
Reserves Category M$ M$ M$ M$ M$
Producing 45,592 36,735 30,633 26,320 23,150
Developed Nonproducing 10,044 7,836 6,206 5,035 4,176
Undeveloped 39,742 31,941 26,260 21,992 18,701
Total Proved 95,378 76,512 63,099 53,347 46,026
Total Probable 92,947 65,723 50,355 40,517 33,702
Total Proved Plus Probable 188,326 142,235 113,454 93,863 79,728
Note: Unit values are based on Company Net Reserves.
(1) Based on NI-51-101 Net Interest reserves and GLJ September 30, 2011 Forecast Prices and Costs.

All evaluations of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimated of the Company's crude oil reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil reserves may be greater than or less than the estimates provided herein.

Annual Audited Consolidated Financial Statements & MD&A

Touchstone intends to file its audited consolidated financial statements and related management's discussion and analysis for the financial year ended September 30, 2011 on or around January 30, 2012. The estimated results used in this press release are subject to any final changes upon the completion of the annual audited consolidated financial statements.

This news release is not for distribution to United States newswire services, should not be disseminated in the United States and does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States. The securities of Touchstone Exploration Inc. have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The companies in which Touchstone Exploration Inc. directly and indirectly owns investments or assets are separate entities. In this news release "Touchstone" is sometimes used for convenience where references are made to Touchstone Exploration Inc. and its subsidiaries in general.

Cautionary Note Regarding Forward-looking Statements: Information in this news release that involves Touchstone's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. Touchstone generally uses words such as "outlook", "will", "could", "would", "might", "remains", "to be", "plans", "believes", "may", "expects", "intends", "anticipates", "estimate", "future", "plan", "positioned", "potential", "target", "project", "remain", "scheduled", "set to", "subject to", "upcoming", and similar expressions to help identify forward-looking statements. The forward-looking statements in this news release are based upon information available to Touchstone as of the date of this news release. Forward-looking statements believed to be true when made may ultimately prove to be incorrect.

These statements are not guarantees of the future performance of Touchstone and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, whether requisite shareholder approvals and/or stock exchange and other regulatory approvals will be obtained in a timely fashion or at all; whether the Transaction will close as contemplated or at all, the impact of general economic conditions in Canada and Trinidad & Tobago; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced in Canada and Trinidad & Tobago; competition; actual and threatened litigation, lack of availability of qualified personnel; the results of exploration and development drilling and related activities; the timing and amount of estimated future production; costs of production; obtaining required approvals of regulatory authorities in Canada and Trinidad & Tobago; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; ability to access sufficient capital from internal and external sources; the risks that any estimate of potential net oil pay is not based upon an estimate prepared or audited by an independent reserves evaluator; that there is no certainty that any portion of the hydrocarbon resources will be discovered, or if discovered that it will be commercially viable to produce any portion thereof; and other factors, many of which are beyond the control of Touchstone.

Readers are cautioned that the foregoing list of factors is not exhaustive. For further information regarding specific risks and uncertainties applicable to Touchstone please see Touchstone's disclosure documents which may be viewed through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at Touchstone does not undertake any obligation to publicly update forward-looking information except as required by applicable securities law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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